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Central Pacific stock down more than 20%

By Dave Segal

LAST UPDATED: 3:20 a.m. HST, Apr 14, 2011

Central Pacific Financial Corp.'s stock had more than one-fifth of its value wiped out yesterday after 18.5 million new shares issued predominantly to private investors became tradable on the market.

Shares of Central Pacific Bank's parent plunged $3.97, or 20.8 percent, to $15.10 on the New York Stock Exchange. The volume was heavy at 327,615 shares, more than seven times its daily average of 45,748. Central Pacific's stock is down 50.7 percent this year.

"The decline in the stock price was not surprising given the large volume of new shares that became tradable today," Central Pacific spokesman Wayne Kirihara said.

B. Riley & Co. analyst Joe Gladue, who has a "sell" rating on the stock, said he's been expecting the stock to fall.

"The new shares becoming publicly tradable should have been baked into the stock price long ago," he said. "I'm not sure why the stock price was $20 and above for so long. I had it as a ‘sell' rating since it was $28 or so."

Gladue called his target price of $18 on the stock "generous."

"My target is based on what I'm projecting as normalized earnings that I'm not sure the bank will get to until 2013," he said. "The price target is based on that and discounted back. The $18 is a little generous because it assumes their turnaround will continue and they'll continue to progress the way it has been doing."

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